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Royal Dutch Shell has cut its dividend for the first time since World War Two, following a coronavirus pandemic-engendered halving of quarterly earnings.
Net income adjusted for cost of supply dropped to $2.9bn (£2.3bn, €2.7bn) in the three months to March 31 compared with $5.3bn in the same period the previous year. Analysts had estimated $2.3bn.
Oil companies are experiencing a crisis as lower energy prices and a collapse in demand for fuels and chemicals puts pressure on their finances, with severe lockdowns and travel bans in place across the world.
The Anglo-Dutch company said it will reduce its quarterly payout by two thirds to 16 cents per share, from 47 cents per share. The company was the biggest dividend payer on the FTSE 100 in 2019.
Shares in Shell opened 6 per cent lower after the news.
Shell was under pressure before the coronavirus outbreak with weaker refining and chemical margins and challenging economic conditions forcing the company to slow shareholder distributions. It also announced at the start of the year that it would be likely to miss its debt reduction targets.
Since then, Shell has said it will suspend its share buyback programme altogether and announced that capital expenditure would fall to $20bn or less this year, from $25bn. It also said that its operating costs would tumble by $3bn from $7bn to $4bn.
Earlier this week, BP said it would maintain its dividend, despite a 66 per cent drop in first-quarter profits, but added that it would review the shareholder distributions in the second quarter.
Shell’s upstream earnings from oil exploration and production plunged 82 per cent in the quarter. Its gas earnings took a 17 per cent hit, while oil products and chemicals also reported falls in profits.
Royal Dutch Shell PLC Class B
